Gold and silver prices both made moves this week, with gold passing US$2,400 per ounce once again and silver finally breaking through the important US$30 per ounce mark. It's the first time the white metal has been there since 2013, and the milestone has sparked speculation about just how high it could go in this cycle.
Momentum kicked in on Wednesday (May 15) after the release of the latest US consumer price index (CPI) data. It shows inflation rose 3.4 percent year-on-year in April, the first time it's cooled in 2024. On a monthly basis it was up 0.3 percent.
The US Federal Reserve's target for inflation is 2 percent, and the first quarter's higher CPI readings have weighed on hopes for interest rate reductions. CME Group's (NASDAQ:CME) FedWatch tool now shows that most market participants don't expect the central bank to start cutting until its September meeting.
On Thursday (May 16), several Fed officials emphasized separately that they want to see more evidence that inflation is cooling before rate cuts begin. The next Fed meeting is set to take place from June 11 to 12.
Bullet briefing — Burry gets into gold, Biden bans Russian uranium
Burry adds physical gold trust to portfolio
Michael Burry of "The Big Short" fame made headlines this week when new regulatory filings showed that his firm added over 440,000 shares of the Sprott Physical Gold Trust (ARCA:PHYS) to its portfolio in Q1. The trust now makes up 7.37 percent of Scion Asset Management's holdings, and is its fifth largest component.
We last spoke about Burry in November 2022, when he said on X, formerly Twitter, that he's long thought the time for gold would be when "crypto scandals merge into contagion." He didn't elaborate and ultimately deleted the tweet, but at the time market watchers saw it as a reference to the collapse of crypto trading platform FTX and related issues.
While the gold price has been on the move this year, many of the experts I've been speaking with have emphasized that a gaining traction with a wider audience — as it seems to be doing — will help it really take off.
Biden bans Russian uranium imports
The uranium sector has been quieter for the last few months, but it was back in focus this week as US President Joe Biden signed into law a bill banning imports of uranium products from Russia. The Prohibiting Russian Uranium Imports Act has been making its way toward the president since late last year, and was widely expected to pass.
The ban is scheduled to go into effect on August 12, although waivers will be available for utilities until January 2028. Since it got the green light, Russian state-owned uranium supplier Tenex has sent out a force majeure notice and told its US customers they have 60 days to get waivers. The company's message went to American utilities including Constellation Energy (NASDAQ:CEG), Duke Energy (NYSE:DUK) and Dominion Energy (NYSE:D).
Additionally, the US government has issued a notice saying that next month it will be asking American suppliers to bid on contracts for as much as US$3.4 billion worth of low-enriched uranium. Currently the country has only one commercial enrichment facility. It is located in New Mexico and owned by Urenco.
Want more YouTube content? Check out our expert market commentary playlist, which features interviews with key figures in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.
And don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.